Last week, I left my Washington home, walked to the nearby Metro
station, rode a train downtown, walked to the National Press Club, and
settled in to hear Steven Rattner, former head of the Obama
administration’s auto task force, declare that "no one has yet invented
a substitute for the automobile."
Steven Rattner (Photo: WSJ)
was like declaring in an airport terminal one’s hope that man may
someday enjoy heavier-than-air powered flight, but most of the heads in
the audience nodded in agreement.
Rattner was there to speak on the topic of the administration’s
automobile bailout and rehabilitation strategy. He was hopeful but
realistic; he recognized that General Motors and Chrysler face an
uphill battle, but he believes that the government was able to do
enough to give the firms a shot at returning to profitability.
that should be a concern of the government is another question
altogether, and it’s not one with which Rattner really engaged.
Understandably, I think, the administration agreed that GM and Chrysler
really shouldn’t be allowed to fail in the depths of recession.
then I believe they determined that if they were going to keep propping
up the companies, they ought to at least shepherd them through a
balance sheet-clearing bankruptcy and reorganization, in the hopes that
the companies might eventually make money.
But what Rattner
was careful not to address was this: Saving the car companies will not
protect American automakers’ market share, will not save the city of
Detroit, and will not really save that many jobs.
The line I
quote in the first paragraph was made in the context of an argument
about annual auto sales, and why sales totals are likely to return to
levels typically observed before the recession. Sales of light vehicles
grew to a peak of 17 million in 2005 before declining and then
plummeting to their current level, in the neighborhood of 9 million
(save for the month of August, thanks to "cash for "clunkers).
to Rattner, GM will break even at a level around 16.5 million car
sales. Maybe we’ll get there. Population continues to grow.
the other hand, households may find themselves holding on to
automobiles longer (particularly since household debts may remain a
problem for the next decade). They may also find themselves buying
fewer cars. America is aging, and households with retirees may not want
a car for each commuter. More families might opt for one vehicle, and
use car-sharing services when another vehicle is necessary.
now we find ourselves in a world in which GM shareholders — among
which number you and me and every other taxpayer — need sales to move
above 16.5 million to get the company back to profitability. That’s a
strange place for us to want to be.